For example: in Canada, the bank accounts of those who protested were literally frozen (for simply speaking out or being critical) and talks of potential CBDCs (aka. used to deduct funds from one’s account as a fine) whilst considering on abolishing cash altogether.
The alternative (for now at least) may be Crypto (online) until they consider that “illegal” in the future penalizing those who are using it, framing that as money laundering or tax evasion, whilst pushing their propaganda of “tap & go is safe & convenient”.
The answers are divided between:
- “Cash is King” (it allows anonymous or “private” transactions between you and the merchant)
- “Contactless” (convenient, but your purchases & transactions are monitored by the state)
Cash is apparently the last bastion of “anonymous” transactions where it doesn’t appear on one’s statement and one gets to keep their money without the state deducting it from their account since a nation’s central bank has monopoly over CBDCs and one’s funds.
That’s not even the end of it: them trying to make BTC or equivalent illegal by making CBDCs the default replacing gold overnight, it would mean all those bills you have are worthless. At this point, the only payment method is CBDCs that are linked to one’s digital ID.
Don’t they fill the same role? What would the practical differences be? They compete for basically the same market anyway, so it’s worth thinking about what system is likely to become the standard.
My bad, I think I misread your comment, but yeah for the end-user it would be basically like what we have now already with digitized USD, perhaps more useful, since payment processors could allow you to send it on a blockchain and pay with VISA. The way I’m viewing CBDC’s is a hopefully more robust upgrade on SWIFT.
Biggest difference is it would be a currency actually printed by the treasury on a blockchain instead of backed by dollars held by a mysterious company based in the carribean (Tether) or an American FinTech company (USDC), or algorithmically pegged by the native blockchain token (USDS/DAI). If public, it would mean money printing would be a lot more transparent, but I seriously doubt a CBDC would be on a public blockchain. It might be easier/faster for banks to do REPO loans and crediting accounts in emergencies. Theoretically, it makes UBI feasible too.
To be honest, I’m far more interested in what a BRICS CBDC would look like. The Unit would end the petrodollar.
I think they will stick with companies like USDC and just keep a leash on them. These stablecoins have freeze functions, the government can take charge of those if they want, and it’s potentially a major source of demand for US treasuries in an environment where US debt keeps looking like a worse bet to everyone, since the legislation mandates full reserves and specifies what those reserves can be denominated in.
Not that any of this is especially a good thing imo. The value of crypto is permissionless money, stablecoins are not that and have centralized controls, at least the popular ones the law approves of.
Practically, I agree with you but the definition of a Central Bank Digital Currency is a currency issued by the country’s treasury. Maybe they come up with some hybrid scheme where the Fed will credit Circle’s accounts and then they print more USDC, but that would for sure require legislation and be an immense responsibility given to a private company.
DAI/USDS are what you’re looking for in a permission-less stablecoin, but unfortunately the founder has back peddled to chase making money over principles. I believe folks have been turning towards a project called https://www.liquity.org/ but its no where the size and pedigree that MakerDAO was.